In a significant move towards enhancing credit accessibility for businesses, the Indian government has recently given the green light for the GST Network (GSTN) to share data of GST-registered entities, with their consent, to the Reserve Bank of India’s (RBI) new ‘Public Tech Platform for Frictionless Credit’. This initiative marks a pivotal step in leveraging digital advancements to streamline the lending process, making it faster and more efficient for entities to secure loans based on their Goods and Services Tax (GST) information.
What is the ‘Public Tech Platform for Frictionless Credit’?
Developed by the Reserve Bank Innovation Hub, a subsidiary of the RBI, this platform is a groundbreaking effort to enable a seamless flow of crucial information to lenders. The Central Board of Indirect Taxes and Customs (CBIC) describes this platform as a system that facilitates the sharing of information from the GST common portal, upon obtaining the necessary consent. It aims to foster an extensive ecosystem for credit, where digital access to information from various data sources is ensured.
The platform operates on a standard and protocol-driven architecture, which allows financial service providers and multiple data service providers to converge efficiently. This integration is expected to revolutionize the lending landscape by making the process of disbursing credit smoother and more transparent.
How Does It Benefit Businesses and Lenders?
1. Faster Loan Processing: By sharing GST-related information, businesses can significantly reduce the time taken for loan approvals. The availability of authenticated data directly from government-sanctioned sources expedites the assessment process for lenders.
2. Enhanced Credit Efficiency: The initiative minimizes costs and processing time for credit disbursement. Lenders gain access to accurate monthly sales and purchase data, enabling a more precise and timely evaluation of credit risk.
3. Transparency and Trust: With GST filings becoming a key factor in credit assessment, there is a higher level of transparency in transactions. Businesses cannot withhold transactional information, ensuring that lenders have a complete and authentic view of their financial activities.
4. Leveraging Government-Sponsored Credit Programs: The integration of GST data with credit assessment processes opens up new avenues for businesses to benefit from government-sponsored credit schemes. This alignment between digital tax compliance and financial services underscores the government’s commitment to supporting business growth and economic development.
Looking Ahead
The collaboration between GSTN and RBI’s Public Tech Platform for Frictionless Credit is a testament to the potential of digital initiatives in transforming financial services. By facilitating easier access to credit for GST-registered businesses, this move not only promises to accelerate economic activities but also to foster a culture of compliance and transparency in the business ecosystem.
This article is only a knowledge-sharing initiative and is based on the Relevant Provisions as applicable and as per the information existing at the time of the preparation. In no event, RMPS & Co. or the Author or any other persons be liable for any direct and indirect result from this Article or any inadvertent omission of the provisions, update, etc if any.
Sources : https://taxinformation.cbic.gov.in/view-pdf/1010019/ENG/Notifications
